First Charleston-based Bank Failure in Two Decades

Jun. 6, 2011 5:47 PM ET

The first Charleston-based bank to fail in nearly two decades was Atlantic Bank and Trust, Charleston, South Carolina. First Citizens Bank and Trust Company, Inc., Columbia, South Carolina, to assume all of the deposits. Formed February 20, 2007, there were 64 full-time employees at their offices in Charleston, Myrtle Beach, and Savannah offices.

"Along with the traditional banking services you expect, our bank provides tailored services such as by-appointment banking and remote deposit for our business customers, which enables you to make deposits from your place of business."www.myatlanticbank.com/about-us-overview.htm

Bank equity was $24.5 million year-end 2009, $7.1 million year-end 2010, and $2.8 million

March 31, 2011

Atlanta Bank, Charleston

The bank had lost $6.8 million year-end 2009, lost $17.6 million year-end 2010, and the first quarter of this year reported a $4.3 million loss. What was worse were non-current loans were almost $47 million year-end 2010 following charge offs of $5.4 million in loans secured by 1-4 family residential properties, $3.7 million secured by nonfarm nonresidential properties, $2 million in construction and land development, $879,000 in commercial and industrial loans, as well as $302,000 each in loans to individuals and "other consumer loans."

Non-current loans March 31, 2011 were $40.7 million and charge offs $1.6 million in construction and land development, $679,000 in loans secured by nonfarm nonresidential properties, and $102,000 in 1-4 family residential properties. Tier 1 risk-based capital ratio 1.96%

June 9, 2009, Peggy Hines resigned as president, saying she was going back to the Del Sol T-shirt franchise in the Charleston City Market that she opened in 2004. "...a store that sells products — sunglasses, jewelry and nail polish — that change color in the sunlight," she described to the charlestonbusiness.com. Her grandfather had started a bank in Georgia in 1930, and her father, continued the family business. She had considered herself a third-generation banker. She had worked for SunTrust Bank for two years, then SC. National Bank, which was purchased by Wachovia, then Union Bank, also purchased by Wachovia.

An August 9 bank examination resulted in an agreement with the Office of Thrift Supervisor to "stop unsafe or unsound banking practices...operating the bank with inadequate levels of capital protection; inadequate earnings to augment capital and reserves; an excessive level of adversely classified loans and assets; and an inadequate contingency funding plan."

“Since January 2010, management was aware of the issues raised by its primary regulator and had already taken steps to correct those issues,” said Neal Arnold, president and CEO of Atlantic Bank & Trust, in a statement about the order, according to the Charleston Regional Business Journal.

As of March 31, 2011, Atlantic Bank and Trust had approximately $208.2 million in total assets and $191.6 million in total deposits. First Citizens Bank and Trust Company, Inc. will pay the FDIC a premium of 0.75 percent to assume all of the deposits of Atlantic Bank and Trust. In addition to assuming all of the deposits of the failed bank, First Citizens Bank and Trust Company, Inc. agreed to purchase essentially all of the assets.

The FDIC and First Citizens Bank and Trust Company, Inc. entered into a loss-share transaction on $141.8 million of Atlantic Bank and Trust's assets.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $36.4 million.

A bog comment on the web site seems to have said it best:

"Opening a Bank in February of 07 and then starting to make real estate loans was, unfortunately, very bad timing. Most likely ABT made residential and commercial development loans on projects that have failed. Frankly, Bush, Clinton, Obama or George Washington had nothing to do with why they failed."